Just-In-Time
Just -In-Time for Healthcare, Is this for real or NOT?
The process of Just-In-Time (JIT) inventory management was adopted by the US auto industry to eliminate the warehousing of parts as needed to assemble cars. Called "dock to factory floor" where incoming materials are not warehoused but forwarded to production. No warehouse inventory to manage results in eliminating excess inventory and improving the return on investment.
No warehouse inventory to manage results in eliminating excess inventory
The process has been widely utilized in the manufacturing sector (not hospitals) as a method to reduce waste and improve out-puts to produce a mass production product for sell on the open market. In other words too be able to adjust to predictable outcomes unlike healthcare which responds to unpredictable volumes. The technique was adopted by Japanese corporations who did not have land to warehouse parts needed for assemble of a product.
Even with all the success realized in the manufacturing sector a JIT inventory systems is not a simple method that the retail and hospital industries can adopt. Both industries rely on having inventory for very different reasons. One is to make sales and the other is to assist in the care of patients and in a lot of cases, to save lives.
There is "NO" true JIT in the hospital setting today; to say there is would be a false statement. When you hear a supplier is providing a JIT system be aware of what that truly is. In most cases there is always stock on hand as a back-up and a cost associated to the service. Hospitals cannot afford to have empty shelves, we are not forecasting production and sales, we are anticipating the unknown which has a direct effect on life.
Manage Your Inventory
There is no substitute for a well managed par-level inventory system supported with a bar code reader.
The only problem in healthcare is that most do not take inventory management serious enough and allowing it to be fragmented from area to area.
Too often the task is assigned to whoever wants it and not trained educated professionals.
Shelf labels and par levels are often not established along with scheduled ordering days.
Materials Management is generally under valued and staffed allowing little involvement with department inventories resulting in overstocking and hording by the nursing floors and support services areas.
Hospitals cannot afford to have empty shelves
Can you imagine not having supplies during a natural disaster or dealing with what took place during 9/11 or Katrina, knowing that your job is to support the unknown.
Hospitals must utilize a par-level inventory system that supports patient care. There is no magic dollar value that can be accurately determined by number of beds in a hospital or volume in surgery let alone emergency room utilization. It has to be managed by dedicated trained individuals that understand stock rotation, supply standardization, and reducing waste.
In reality, JIT inventory systems are about having “the right material, at the right time, at the right place, and in the exact amount” to produce a product, not save a life. The manufacturing industries have had to address major problems with JIT operation in that it leaves the supplier and downstream consumers open to supply stocks shortages and large supply or demand changes if not properly forecasted.
Interruptions in the shipping process add additional stress when dealing with low inventories for which hospitals in rural areas cannot afford. Again, JIT is a means to improving the supply performance of the system that produces a product for sale.
The Cost of Managing Inventory
The true long term value associated to managing inventory has never been evaluated in healthcare today.
Regardless of how large a hospital is, if the process is staffed and managed following traditional inventory management steps by one entity the outcome can be better tracked and corrected addressing waste….rather then adopting methods from other industries sold as something that they truly are not.
Another drawback of JIT systems
Another drawback of JIT systems is that re-order levels are determined by historical utilization. If the utilization increases above the historical average demand, inventory will be reduced faster than usual and cause stock outs. Hospitals do not have predictable historical demands; they are based on the unknown and cannot afford stock-outs.
Lower stock levels mean that smaller shipments coming more often which in hospitals must be at the users supply cabinet as soon a possible, without interruptions. In healthcare unlike the auto industry, we rely on one primary vendor for low dollar high volume supplies and numerous others for high dollar specialty items that are shipping from various suppliers in and out of the state where the hospital is located. In some cases that means from west coast to east coast.
Developing long term relationships with medical suppliers generally allows hospitals to manage their inventories with some assurance that vendors will maintain stock to meet demand changes. Large multi-hospital systems can change primary vendors due to contracts every three or four years which can also add to the problem.
JIT works best when there are long term relations that do not change. Often times the manufacturer sends staff to the vendor to work out shipping and volume related issues. This never occurs in the hospital supply systems, we rely on sales reps who deal with supplier customer services staff that report to a hospital buyer who then passes the information hopefully to the end user.
In short, Just-In-Time inventory management is not a true reality in healthcare today as is stockless inventory programs. Have a couple of natural disasters in your state and watch what happens.
Patient Care Givers Deserve Professional Support Services
Support services be it SPD, materials management, lab, x-ray, pharmacy, EVS/Linen, and Nutritional Services all support patient care givers.
However they are often overshadowed by nursing who is experiencing staff shortages which are predicted to increase to disastrous levels in the coming years.
Nursing cannot do everything and need to know that we can support them to achieve the best patient care.
